stephen bagby 2009 pdi – army 27 may 2008 cost culture update cost culture update

Stephen BagbyStephen Bagby

2009 PDI – Army2009 PDI – Army27 May 200827 May 2008

Cost Culture

Update

Cost Culture

Update

Army Cost CultureUpdate


Increased Leadership Commitment Establish Cost Management Process & Provide

Guidance Costing In GFEBS Training & Career Development Designed Enterprise Cost Management

Framework Cost Culture in Theater of Operations

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Senior Leader CommitmentSenior Leader Commitment

GEN George W. Casey, Jr.,HON Pete Geren, SAALL ARMY

GEN David PetraeusCENTCOM COMMANDERS

GEN Raymond OdiernoCOMMANDERS, MNF-I

“inculcate cost culture” “Redouble efforts of good stewardship of resources” “shrink and share;”

D O T M L P FThinking Domains

Decision Forums

Generate Capability

Gaps / Requirements

QDR/TAA CSAForce Design Update FD PEGS

POM/ BES

Basis of Issue Plan ORDAB Manning AOA Studies SAG/Other All Equipping

JCIDS/AROC AROC Training

Acquisition Process Milestone Reviews Sustaining

ONS/JUONS AR2B Organizing

Strategic Initiatives AEB Installation

Installation/MILCON MILCON IPTLeadership Ad Hoc

Doctrine

Organization

Training

Materiel

Leadersh

ip

Personnel

Facil

ities

Incorporating ‘Cost’ Into DOTMLPF

1. Business Case Analysis2. Forum/ Decision Point3. Independent Chair

Congressional / OSD CommitmentAcquisition Reform Act

Congressional / OSD CommitmentAcquisition Reform Act

Director of Program Analysis

& Evaluation (PA&E)

Director of Cost Assessment &

Program Evaluation

Cost Assessment

Program Evaluation

• Trade-Offs Among Cost, Schedule, & Performance Objectives

• Authority to Challenge Acquisition / PPBES / Requirements

• Reports to Congress 10 Days After Budget

• New OSD Director of Cost Assessment & Program Evaluation






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Cost Planning

Cost Controlling

Cost Analysis

Cost Measurement

Cost Management

Process

Cost Management ProcessCost Management ProcessCost Management - Managing Business Operations Effectively & Efficiently Through the Accurate Measurement & Thorough Understanding of the “Full Cost" of an Organization's Business Processes, Products & Services in Order to Provide the Best Value to Customers.

Cost Management HandbookCost Management Handbook

The Office of the Deputy Assistant Secretary of the Army (Cost & Economics) [DASA-CE] is the Army’s proponent for cost policy. Please refer to the Cost Management Community of Practice for the current version of the Army Cost Management Handbook:

https://www.us.army.mil/suite/page/593701

Full Cost

Overhead / Allocation

Labor Tracking

Contract Cost Tracking

Standard Rates

Depreciation

Master Data For Cost Model


Definition of Cost Management SuccessDefinition of Cost Management Success

The Office of the Deputy Assistant Secretary of the Army (Cost & Economics) [DASA-CE] Developed the Army Cost Management Maturity Model Jun 2008 to Assess Level of Cost Management Activity across Army Organizations .

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1.0

2.0

3.0

4.0

5.0

Integration with Quality/ProductivityImprovement

Knowledge Sharing/ Best Practices

LeadershipCommitment

WorkforceCompetencies

Acceptance & AttitudeAccountability/ Performance Mgmt

Process Integration

DataQuality

EnterprisePerspective

Actual

Target

ARMY COST MANAGEMENT

MATURITY MODEL

Version 10: 4 June 2008






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GFEBS Cost Structure Supports Supports Operational Decision Making & Analysis

Full Cost Organizations

Full Cost Product/Services

Full Cost Customers

IMCOM:Director of Logistics

TRADOC:Ranger School

FORSCOM:1st Brigade Combat Team

SSPs:Provide clothing,Issue OCIE, etc

Courses:Mission technique classes, combative

training

- Ready Unit - Capability

Mission Commander

- Division / BCT- MOS- FMS

Tenants:- School- Brigade

TRADOC Cost Centers - Fort Benning TADV TAPE TATC TFNC TRCS TSPU VMUS VTRD Overall Result

ARMY/57660001 COMBAT DEV DIR $7,941 $7,941

ARMY/57660002 HHC $862 $862

ARMY/57660003 CH-BOLC $883 $883

ARMY/57660004 C4/ADTS $1,855 $1,855

ARMY/57660005 OFFICE OF THE CMDT $21,747 $27,218 $22,391 $71,356

ARMY/57660006 FUNCTIONAL TNG BR $10,429 $9,884 $20,313

ARMY/57660007 RESERVE TNG $4,690 $4,690

ARMY/57660008 RESOURCE MANAGEMENT $17,324 $6,248 $47,673 $71,244

ARMY/57660009 INFORMATION MGMT $12,449 $12,449

ARMY/57660010 TDD ADMIN $33,306 $33,306

ARMY/57660011 QUALITY ASSURANCE $6,317 $6,317

ARMY/57660012 CHAPLAIN MUSEUM $16,646 $16,646

ARMY/57660013 AIT $162 $162

$82,806 $1,855 $1,908 $45,915 $6,317 $84,638 $16,646 $7,941 $248,025

Actual Execution Year-to-Date by MDEP

Overall Result

Capture Cost by Organization

FORSCOM - Brigade Cost by Period Actuals Actuals ActualsApril 09 May 09 Summary

$ $ $

ARMY/76VVWAR9T0 3BCT 3/1 CAV 4,503.11 2,864.16 7,367.27

ARMY/76VVWARXA0 3BCT 1/10 FA 69,902.00 69,902.00

ARMY/76VVWARXT0 3BCT 1/10 FA 12,158.21 11.64 12,169.85

ARMY/76VVWGM6T0 3BCT 2/69 AR 52,455.02 28,670.32 81,125.34

ARMY/76VVWJD2A0 3BCT 203 BSB 19,554.72 11,298.08 30,852.80

ARMY/76VVWJD2C0 3BCT 203 BSB 1,276.00 1,276.00

ARMY/76VVWJD2D0 3BCT 203 BSB 2,304.75 2,304.75

ARMY/76VVWJD2T0 3BCT 203 BSB 102,807.33 36,187.85 138,995.18

191,478.39 152,514.80 343,993.19

Cost Center

Overall Result

• IMCOM Installations• TRADOC Schools• FORSCOM Brigades

Service SSPUSAG Fort Benning

SERO Jackson

USAG Fort Stewart

Overall Result

Facilities Mgmt 53A $66,068 $67,036 $113,434 $246,53853B $53,650 $38,521 $92,17153C $154,008 $1,474 $155,48153D $13,858 $229,009 $242,86653E $3,538 $19,770 $23,30753G $19,033 $19,842 $38,875

Refuse Removal 60A $7,333 $7,33360C $26,861 $6,023 $32,884

Env Compliance 66A $28,957 $1,969 $55,200 $86,12666B $39,738 $6,553 $46,29166C $8,665 $17,561 $26,22666D $7,363 $648 $1,857 $9,86766E $1,523 $34,797 $36,320

Overall Result $384,700 $115,547 $544,040 $1,044,287

Brigade Cost Labor Travel Acrft POL Purchase CardOverall Result

ARMY/76VV0034 3 BCT AUG $ 32,597 $ 32,597

ARMY/76VVWAR0T0 3BCT 1/15 IN $ 21,286 $ 7,339 $ 28,625

ARMY/76VVWAR4AA 3BCT 3/3 IN $ 33,913 $ 28,940 $ 62,853

ARMY/76VVWAR9T0 3BCT 3/1 CAV $ 4,018 $ 3,350 $ 7,367

ARMY/76VVWARXT0 3BCT 1/10 FA $ 12,158 $ 12,158

ARMY/76VVWGM6T0 3BCT 2/69 AR $ 51,945 $ 29,121 $ 81,066

ARMY/76VVWJD2A0 3BCT 203 BSB $ 25,317 $ 5,372 $ 30,689

ARMY/76VVWJD2T0 3BCT 203 BSB $ 108,497 $ 30,116 $ 138,613

$ 32,597 $ 33,913 $ 211,062 $ 116,396 $ 393,969 Overall Result

Capture Cost by Product/Service and Customer

Cost of Installation Services Provided

to Tenants

BCT Cost by Resources Consumed

Exportable to Excel for Analysis

Cost Reporting by Multiple Views (Cost Objects)

GraphicDisplay

Integrates Cost Measurement and Analytics

Provides Multiple Analytical Cost Views

Annaul Year-to-Date Variance

Plan Actuals Plan - Actuals

A2AAB IMCOM HQ $29,082,800 $3,258,873 $25,823,927

A2ABM SERO Jackson $105,281,745 $38,581,957 $66,699,788

A2ABN USAG Fort Stewart $85,058,653 $35,604,694 $49,453,959

A57CC TRADOC INF $36,825,050 $11,806,231 $25,018,819

A76VV FORSCOM Ft Stewart $130,258,800 $3,662,818 $126,595,982

$386,507,048 $92,914,573 $293,592,475Overall Result

Organization - Variance Analysis- Controlling- Cost Planning

- Cost Comparison- Benchmarking- Forecasting

- Trend Analysis- Cash Flow - Operational Cost Mgmt






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Training OpportunitiesTraining Opportunities

Cost Management 101 4 half days of instructor-led training in advance of GFEBS deployment

GFEBS – Cost Management Training

These courses are either computer-based or instructor-led training classes to learn how to operate within the GFEBS cost module.

Cost Management Process OverviewCost Master Data MaintenanceCost PlanningCost Collection and AllocationLabor and Payroll ProcessCost Collection and AllocationControlling Close and Cost Reporting and Analysis

Cost Management Certificate CourseThe program of instruction (POI) is designed to teach the fundamentals of cost management with a view to developing a cadre of Army personnel who are professionally knowledgeable, analytically competent, and personally motivated to serve as proactive change agents within their respective Enterprise line and staff organizations.

Naval Postgraduate School - 4 WeeksEarns 12 credits toward masters degree.Requires command nomination and completion of prerequisites.

Week 1 – Managerial CostingWeek 2 – Operations Management Week 3 – Cost ControlWeek 4 – Organization Development

Self Study-Cost Management Community of Practice https://www.us.army.mil/suite/page/593701

This site contain the Army Cost Management Handbook and the Cost Management 101 training slides.

Cost Management Courses in all Professional Development Programs

DASA-CE is working with Army Civilian University and TRADOC to include cost competency skills for all military and civilian personnel. The program is being developed based on a matrix of stackable credentials that build competency over time.


Cost Management 101Cost Management 101• Day 1: Cost Management Overview

– Understanding of why managing costs are important, Army’s overall objectives, the process of Cost Management, how it differs from Budget, and key cost terms

• Day 2: Cost Object Definition– Understanding of an ERP, how to build a Cost Model, and the various

cost objects within a Cost Model (e.g. organization, products, job orders, etc.)

• Day 3: Assignment of Costs– Understanding of cost allocations/assignments, how to chose which to

utilize when, how to valuate the results of the assignments (Std. vs Actual), and rate creation

• Day 4: Analysis and Reporting– Understanding of the results of the Cost Model and how various types

of analysis and decisions are supported

Training Designed for Pre-GFEBS Deployment for Resource and Operational Managers. Provides Common Understanding of Definitions, Concepts, Methodologies and Principles.

Cost Competency MatrixCost Competency Matrix


Ba

sic

/Ori

en

tatio

n


Ad

van

ced


Ma

ste

r


Se

nio

r L

ea

de

r






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Services&

InfrastructureHuman Capital

Materiel

Train

ed an

d R

eady

Fo

rces for th

eC

om

batan

t Co

mm

and

ers

Improve ARFORGENImprove ARFORGEN: : Effective and Efficient delivery of Trained and Ready Forces

ARFORGENReadiness

CE – Core EnterpriseCE – Core Enterprise

HQDA(Secretariat + ARSTAF)

Army Enterprise BoardArmy Enterprise Board

Chief of Staff of the ArmyChief of Staff of the Army

Secretary of the ArmySecretary of the Army

Objective: Efficient Delivery of Outputs

Enterprise GovernanceEnterprise Governance

– Process Teams – Process Teams

Resources (Labor, Equipment, Assets)

Organizations (Cost Centers)

Products/Services

Cost Management Construct

Progra

m / Budge

t Constr

uct

X

X

LightLight

X

StrykerStryker

Heavy

HumanCapital

Read

ines

s Services &

Infrastructure

Materiel

Core Enterprises

Managing Resources to Effectively and Efficiently

Produce Outputs to Achieve Strategic

Objectives

Managing Funds to Ensure Strategic Objectives are

Effectively Resourced

Enterprise Resource ManagementEnterprise Resource Management

OA / M

DEP

Army Cost Management FrameworkArmy Cost Management Framework

Available / DeployTrain / Ready

Reset

Services & Infrastructure

Human Capital

Materiel

Readiness •Command & Intelligence

•Operating Forces

HBCT IBCT SBCT

ARFORGEN

•Train Units•Operations & Activities

•Acquire & Train•Manage (Pay) & Distribute•Develop & Educate•Force Development

•Research•Procure•Sustain•Distribute •Dispose

•Facility•Installation•Command Programs•Centrally Managed Programs

Prog

ram

Fra

mew

ork

Cost

Fra

mew

ork

•Civ Education / Training

•Civ Personnel Svcs

•Mil Education / Training

•Mil Personnel Svcs

•Prof. Development Educ.

•Depot Maint / Repair of Mil Eqt

•Ordnance

•S&T and R&D

•Systems Acquisition, T&E,

Engineering, and Contracting

•Community & Family Svcs

•Environmental Security &

National Resource Svcs

•Health Svcs

•Installation / Facility Mgt

Readiness Core EnterpriseReadiness Core Enterprise

RIGHT FORCE . . .

RIGHT READINESS . . .

RIGHT COST . . .

RIGHT TIME . . .

. . . TODAY, AND IN THE FUTURE

Requirements /Risks

Cost Benefit AnalysisProcess Owner

OUTPUT =

READINESSCOST

Sample Types of Analysis Include:

• Organizational Performance• Analysis of Alternatives• Variance Analysis• Business Case Analysis• Cost / Risk Assessments

Provides Products / Services

Requirements /Risks

Cost Benefit Analysis

Cost Benefit Analysis

Cost Benefit AnalysisProcess Owner

OUTPUT =

READINESSCOST

OUTPUT =

READINESSCOST

OUTPUT =

READINESSCOST

Organization Level 1



Process Owner

Process Owner

Readiness Core EnterpriseCascading Through Processes

Readiness Core EnterpriseCascading Through Processes

IBCT Ready

IBCTs Ready





Framework Cost Culture in Theater of OperationsX

USARCENT G8 Theater FM StrategyUSARCENT G8 Theater FM StrategyMISSION: USARCENT G8 Proactively Shapes Financial Environment While Simultaneously Providing Uninterrupted Support to the USCENTCOM AOR

TASK Lines of Effort Objectives Ends

Deploy / Maintain FM Battle CMD Sys

OPERATIONAL OBJECTIVES

Deploy 20 FM automated systems in use in

CONUS & e-Commerce

Integrate cost management, analysis,

& planning into decision making process

Measure & articulate full cost of ARCENT’s

business processes

Determine relationship among readiness, capacity, cost &

requirements

Implement new FM doctrine throughout

Theater

THEATER STRATEGIC OBJECTIVES

(1)Single RM entry into CENTCOM

AOR

(2)Leverage

Theater-wide FSO

capabilities

(3)Unburden JTF

Staffs

(4)Achieve FM

unity of effort

Establish a Cost Culture in CENTCOM AOR

Determine Cost of Readiness & Effects

Develop & Revise FM Doctrine

Shape, Build, and Promote Desired FM

Effects

Trained & Ready FM

Community to Conduct Full

Spectrum OperationsUS Title 10 Support to

CJOA, AFORs & Joint Enabled Logistics

UNCLASSIFIED

UNCLASSIFIED

Costers: Who We Are

Costers are chartered by the Deputy Assistant Secretary of the Army for Cost and Economics (DASA-CE) and ARCENT – C8 to provide cost analysis support and promote Cost Culture

Projects since October 2008•Science Project - Modeling Requirements, Readiness, Capacity and Cost (R2C2)•Cost of ARCENT and Cost of War•Re-Balancing an Army at War•Afghanistan Buildup•FY 09-11 Budget Submission•Contractors in Theater •Afghanistan TPE and Forward Repair Activity•ARCENT Retrograde of OIF Drawdown

CARB Cost ValidationDeployed OIF & OEF Direct Staff Support

04/19/23 01:51 32

Relating Requirements, Readiness, Capacity & CostRelating Requirements, Readiness, Capacity & Cost

– Fixed - Operational Readiness – Fixed - Operational Requirement– Fixed - Industrial Capacity including

excess

– Fixed - Operational Readiness – Fixed - Operational Requirement– Adjust - Industrial Capacity to be

optimized

– Fixed - Operational Readiness – Adjust - Operational Requirement– Fixed - Industrial Capacity optimized

Start Point - Current Step 1 - Adjust Capacity Step 2 - Decrease

Requirement

Description

Initial conditions in theater had readiness at 100% and excess capacity

Description

The industrial capacity is reduced with little to no effect on readiness. This achieves balanced capacity with a cost avoidance.

Description

Decreased requirement and a shift of readiness from 100% to 90% provides additional capacity that can be reduced for a cost avoidance.

Cost Analysis Resources

• GFEBS General Fund Enterprise Business System

• Automated Cost Estimating Integrated Tools (ACEIT)

• Operating & Support Management Information System (OSMIS)

https://www.osmisweb.army.mil

• FORCES (CONOPS) Cost Models

• Army Military-Civilian Cost System (AMCOS)

• Automated Cost Data Base (ACDB)

• Joint Integrated Analysis Tool (JIAT)

• Capabilities Knowledge Base (CKB)

• FM&C Website

• AKO Cost Management COP https://www.us.army.mil/suite/page/593701

https://www.osmisweb.army.mil/


stephen bagby 2009 pdi – army 27 may 2008 cost culture update cost culture update

Documents

army cost culture

cost management process

theater of operations

independent chair slide

pdi army

guidance costing

domains decision forums

forum decision point